The finance department has decided the borough will resume collection efforts and power disconnects for severely delinquent residential utility customers after COVID-era payment moratoriums and grace periods have ended.
The borough on Tuesday shut off the power to three residences that had failed to make payment or set up a payment plan; two of those account holders paid their bill the same day and had their power restored.
Though a state moratorium on utility shutoffs expired a year ago, the borough instituted its own grace period, said Finance Director Mason Villarma, and the borough did not take collection action against past-due utility bills and arrears.
That debt built up to a significant amount over the COVID-19 era, he said.
As of last week, the borough was still owed about $120,000 on utility accounts for Fiscal Year 2020, which closed on June 30, 2020. Of that total, two-thirds was owed on active accounts and about one-third on closed accounts. The $120,000 represents about 7% of the utility’s total annual revenue for residential accounts.
Commercial account revenue totaled $2.2 million, with nothing owed from that year, Villarma said.
He hasn’t yet looked at what’s owed on Fiscal Year 2021.
Past-due residential account holders have been receiving notices since the state moratorium ended, and were notified in the most recent billing cycle that the borough would resume disconnects and to get in touch with City Hall to set up a six-month payment plan.
Customers at least three months behind or $1,000 in arrears are at risk of a disconnect unless they set up a plan to pay, Villarma said.
At least with a six-month payment plan, even if the customer fails to cover their debt by the end, the disconnect would come in the summer rather than this winter. “If we get to dire straits, we’ll feel better about doing it then,” Villarma said. “Of course, that’s never what anybody wants.”
He said it’s a fine line between enforcing consequences in a graceful fashion, and providing for the needs of the community at the same time.
“The borough’s enterprise funds can’t afford to continue to lose out on that money,” he said. The utility, as an enterprise fund, is to be self-supporting, covering its costs with revenues and not general tax dollars.
Of the 60 delinquent households the borough started with at the beginning of this collections push, most have come in to pay or set up payment plans, and the number had dwindled to 20 as of last Thursday and then four as of Monday.
“We’re aiming for zero disconnects, so that’s a really great thing,” Villarma said. The borough will not disconnect power if the temperature is below 32 degrees.
Utility department employees on Monday left “final, final notice” door hangers at the homes of delinquent accounts, advising the residents to contact City Hall to avoid a shutoff.
On Tuesday, the borough shut off electricity at three residences that owe a combined total of more than $10,000, about 13% of the debt owed on all delinquent residential accounts in the community as of last week.
Meanwhile, the borough is pursuing help through the Alaska Energy Authority’s electric utility relief program, which is funded with $7 million from the federal American Rescue Plan Act of 2021. The state agency can grant money to electric utilities to help address delinquent residential accounts due to the economic hit of COVID-19.
The program is open for debts that accrued from March 11, 2020, to April 30, 2021.
“If we can attribute some of these people’s delinquent accounts to COVID,” Villarma said, “then we can get that potentially reimbursed in grant form, and those will be credited toward people’s accounts we are unable to collect on, or (if) they’re closed, so the city will be able to recuperate a little money there.”
With the return of possible disconnects, Villarma said he wants to emphasize “we’re not out to get people, we want to establish a string of responsibility here, help people where we can. But at the same time utilities aren’t free, and enterprise funds operate as a business, in that sense. To be financially sustainable for the foreseeable future, this is a critical step.”
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